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Mini Exercises (Sundry)

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Mini Exercises (Sundry)

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by MikeLittle.
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  • November 6, 2015 at 9:55 am #280791
    Amit
    Member
    • Topics: 41
    • Replies: 32
    • ☆☆

    Question 9
    It has been discovered that goods with a cost of $6 million, which had been correctly included in the count of the inventory at 31 March, 2010, had been invoiced in April 2010 to customers at a gross profit of 25% on sales, but included in the revenue (and receivables) of the year ended 31 March, 2010. What adjustment is necessary (if any) to correct the above situation?

    ->
    Why not
    inventory decrease by 6,000
    Cost of sales increase by 6,000
    because the goods have been invoiced; i am confused sir.

    November 6, 2015 at 3:24 pm #280825
    MikeLittle
    Keymaster
    • Topics: 26
    • Replies: 22705
    • ☆☆☆☆☆

    Because the question specifically states “which had been correctly included in the count of the inventory at 31 March, 2010”

    The fault is in invoicing, not in the stock count so the correction is to reduce receivables and reduce revenue

    OK?

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